Cable warns on 'reckless' EU exit

Liberal Democrat Business Secretary Vince Cable will today brand advocates of EU withdrawal "self-indulgent and reckless", as he warns that a British pull-out would mean an "exodus" of international firms from the UK and the loss of thousands of jobs.

PUBLISHED: 00:36, Thu, May 16, 2013

Business Secretary Vince Cable will say if the UK quit the EU that there could be an exodus of non-EU firms based in this country [PA]

No "serious friend of British business" would call for a break-up of Britain's relations with the EU, Mr Cable will tell a business conference in Birmingham in a scathing response to growing clamour for withdrawal.

Amid Conservative calls for legislation on an in/out referendum on UK membership, Mr Cable will warn the Liberal Democrats' coalition partners not to over-react to the successes of the UK Independence Party in this month's council elections.

"The Liberal Democrat manifesto in 2010 promised we would put Britain at the heart of Europe in pursuit of national opportunity, security and prosperity - and we will continue to push for this in Government," he will tell the British-American Business Council. "It is simply self-indulgent and reckless for parties or individuals to risk so much in order to address one concern raised in a council election by just 7% of the electorate."

Lib Dem Deputy Prime Minister Nick Clegg told MPs on Wednesday that it was a matter of "when not if" the UK holds a referendum on EU membership, and Mr Cable will himself on Thursday acknowledge that developments in the eurozone will "necessitate in due course a referendum on any substantial change in constitutional arrangements".

But he will urge proponents of withdrawal, such as Conservative former chancellor Lord Lawson, not to exaggerate the costs to the UK of EU membership or underplay the potential damage departure could inflict on British business.

The UK is currently the "favourite destination" for non-EU firms setting up European HQs, hosting more than Germany, France, Switzerland and the Netherlands combined, Mr Cable will say. If Britain quit the EU, he will warn, "we could reasonably expect an exodus of the non-EU firms headquartered in this country, precisely because they regard the UK as the gateway to Europe... These companies in Japan, China, the USA and elsewhere whom we are currently trying to attract to the UK will - quite reasonably - think again if they believe we are planning to leave the EU."

Many of the thousands of foreign-owned financial sector companies in the City "would question the value of a UK location were it to cut itself adrift", he will add. Despite the growth of emerging economies like China, India and Brazil, the EU is likely to remain Britain's most important market "for another couple of decades", offering many growth opportunities even during the current problems in the eurozone, Mr Cable will say.

Eurosceptics who argue that Britain should be focusing on trade with the BRIC nations rather than Europe need a "reality check", as expanding exports to these markets is "in no way inhibited by membership of the EU". And while half of British exports go to the EU, supporting one in 10 UK jobs, China accounts for less than 2.5% of exports, India and Russia below 2% each and Brazil under 1%.

It is "far from obvious" that on its own, the UK could strike the kind of free-trade agreements currently under discussion between the EU and the US, Canada, India, Japan, Singapore and countries in South-East Asia and South America, he will warn.